ACCC flags shift in regulation

The ACCC has re-opened the long-standing debate about wholesale ADSL regulation, issuing a discussion paper as the precursor to an inquiry as to whether the sector needs greater regulation.

While Australia’s infrastructure-based ADSL competitors – those who have installed their own DSLAM networks – have their access to Telstra’s copper network protected by regulation, there is no similar regulation protecting the host of ‘switchless’ retailers buying wholesale ADSL services.

“[T]he ACCC has regularly received complaints from access seekers about the level of Telstra’s wholesale ADSL prices relative to Telstra’s retail ADSL charges,” the regulator notes

As the Australian Competition and Consumer Commision notes in its discussion paper, it has previously considered whether or not wholesale ADSL should be regulated – in 2005-06 and again in 2010 (leading to an announcement earlier this year that it was adoption a “wait and see” approach to the issue).

The problem for the industry is that there’s only weak competition in the wholesale ADSL market. Telstra’s wholesale services are offered across its 2,800 “ADSL-enabled” exchanges, the Commission states, but other DSL infrastructure owners (it nominates AAPT and Optus as examples) have a far more limited footprint.

This means any retailer seeking a national footprint can do so only if it deals with Telstra. “It is clear that Telstra has retained a dominant position in the supply of retail and wholesale ADSL services,” the ACCC says.

The inquiry will also look at what competition concerns are likely to develop in the market; the likelihood that “effective” competition might emerge in the wholesale ADSL market; and whether Telstra’s proposed structural separation is likely to make the market more competitive without specific regulation.

The regulator appears to have a particular eye to the rural and regional markets, noting that in these areas, competing networks “have not developed to any material extent”.